Apollo Education to Be Taken Private in $1.1 Billion Deal

Apollo Education Group Inc. said Monday it had reached a deal to be taken private by a group of investors including Apollo Global Management LLC in a $1.1 billion deal, as the struggling education company attempts to overhaul its University of Phoenix operations.

"For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance. This doesn't need to be the case," said Tony Miller, operating chief of Vistria Group, one of the investors in the deal. Mr. Miller is slated to become Chairman of the Apollo Education Group Board when the transaction is completed, which is expected in August.

The investing group includes the Vistria Group, funds affiliated with Apollo Global and Najafi Cos.

The Wall Street Journal had reported Jan. 11 that Apollo Global was in advanced talks to buy Apollo Education for about $1 billion.

The purchase, at $9.50 a share in cash, represents a 49% premium over Apollo's closing share price on Jan. 11, just before The Journal's report. It is a 37% premium over Apollo's closing price on Friday. The company had said on Jan. 8 that it was exploring a change in control of the company.

Shares of Apollo Education climbed 28% to $8.90 in premarket trading.

Apollo Education had been in talks with a number of private-equity firms since late last year.

Greg Cappelli, chief executive of Apollo Education, said in prepared remarks that the deal would "allow Apollo Education Group the flexibility and runway it needs to complete the transformational plan at University of Phoenix."

In recent years, Apollo and other for-profit higher education institutions have seen enrollment slide amid scrutiny of their recruiting, career outcomes and student-loan default rates. Shares of a number of the companies, especially Apollo Education, have been battered as a result.

In October, the Defense Department said it had barred the University of Phoenix system from recruiting on military bases and prevented troops from using federal money for classes. Earlier last year, the company, which operates on-campus and online classes, disclosed probes by the U.S. Federal Trade Commission and the California Attorney General's office into its marketing and other business practices. The company has said it intended to cooperate fully with the agencies' requests for information.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

February 08, 2016 08:25 ET (13:25 GMT)

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